December 1999

07 December 1999

In a 1992 letter to The New York Times, William Manchester put his finger on why the Kennedy assassination continues to fascinate and puzzle us. It may seem odd, Manchester wrote, but there is an aesthetic principle at root. Put “the murdered President of the United States on one side of a scale and that wretched waif Oswald on the other side, [and] it doesn’t balance. You want to add something weightier to Oswald. It would invest the President’s death with meaning . . . ”

In his 26th book Norman Mailer accepts – no – embraces the aesthetic challenge Manchester identified. It is a challenge, interestingly enough, that Manchester (along with the Warren Commission) had no small part in creating. Rereading The Death of a President almost 30 years after its publication, one is struck by the author’s palpable, barely suppressed fury at Lee Harvey Oswald for killing the most powerful man in the world and robbing Manchester’s generation of its first president. The assassin is beneath contempt, a callow nonentity with a mail-order rifle. Could even the most talented writer rescue Oswald from this fate and give this killer back his humanity?

Mailer and his collaborator, Lawrence Schiller, did just that for Gary Gilmore 16 years ago in The Executioner’s Song. But the task here is even more difficult, given the layers of cant and crud that have accumulated over 30 years. The best part of Oswald’s Tale, covering the 2½ years he spent in Russia (1959-1962), recalls the movie Citizen Kane, for the approaches are similar. Like Welles, Mailer cleanses his subject by refusing to adopt an authoritative narrative; the account is an exploration rather than a solution, and the posture works brilliantly. Mailer painstakingly draws upon may voices and sources – interviews with friends and family, KGB reports on this strange American, diplomatic cables, and Oswald’s self-described “historic” diary – to assemble a compelling mosaic. No one of these rough, sometimes irregular pieces presents Oswald in the round, but the accumulated effort, when one draws back, is stunning. Perhaps it is an illusion shared by the writer and reader, but Oswald does begin to be comprehensible, a tragic rather than absurd figure.

Mailer/Schiller spent six months in Moscow and Minsk gathering information and impressions; it was what Mailer calls “the equivalent of an Oklahoma land-grab for an author.” They were armed with a promise from the Belorussian KGB that it would open its files on Oswald in Minsk, and although the materials were less comprehensive than promised (or imagined?), they enabled Mailer to reconstruct an important and largely undocumented part of Oswald’s life. Oswald lived in a bell jar, and before the state security organs decided that he was boring, no movement, conversation, or contact was too insignificant to be recorded by the KGB – literally. Observation reports and tape recordings of Mariana and Lee are used sparingly but to great effect. The end of the Cold War also meant that the Oswalds’ Russian and Belorussian acquaintances were free to talk about the defector in their midst, and these testimonies are persuasive more than 30 years after the KGB warned friends, former lovers, and enemies alike to keep their mouths shut.

Shortly after Oswald leaves Minsk, however, the book begins to falter. So much so that one is tempted to believe that the author’s original conception was Oswald in Minsk rather than Oswald’s Tale, and that Mailer began the project fully expecting the Soviet archives to reveal that Oswald was working for a secret agency (CIA or KGB). But Mailer became utterly convinced that no one sent Oswald to spy on Russia, and that the KGB had no interest whatsoever in recruiting him once he arrived uninvited. The only secret power center Oswald worked for was the one “in the privacy of his own mind,” Mailer writes.

Conceptions often must be altered in midstream, of course, and Mailer musters a good argument for forging ahead. He likens the chapters on Moscow and Minsk to a base camp, from which he will launch an assault on the “greatest mountain of mystery in the 20th century.” Yet that expedition proves to be nothing more than a running, occasionally amusing or interesting, commentary on testimony excised from the exhaustive Warren Commission hearings – some of which is reprinted – along with so many excerpts from Priscilla Johnson McMillan’s 1977 biography, Marina and Lee, that she deserves a royalty cut. There is, literally, nothing new here.

To Mailer’s credit, he cast aside his initial prejudices and wrote a work that concludes, albeit grudgingly, that Oswald “had the character to kill Kennedy, and that he probably did it alone.” This was not virgin territory, after all, for Mailer. He has publicly praised different conspiracy theories for years, and Oliver Stone in particular for supposedly driving out nonsense (“the mind-stultifying myth of the lone assassin”) with superior nonsense. Yet ultimately Mailer lacks the guts to say what needs to be said besides the fact that Oswald was the assassin: The Warren Commission got it right.

06 December 1999

If the narcotic of choice for investment bankers is doing deals, then Henry Kravis is Wall Street’s biggest junkie.

Kravis lives and breathes for the big deal, the one that sucks that air out of competitors and detractors. Time stops for a moment when a big deal is consummated, the corporate landscape is forever changed, and fortunes are made. In less than a decade, the forty-five-year-old Kravis has parlayed a financing technique known as the leveraged buyout (LBO) into a holding-company empire that surpasses General Electric in size. He also ostentatiously presides over a personal fortune estimated (conservatively) at $330 million. That beats the rush from any non-prescription drug.

The story of Henry Kravis is a quintessential tale from an era whose central theme, we don’t need media sociologists to tell us, is greed. It’s about insatiable avarice on Wall Street, worker concessions and lost jobs, businesses dismantled or sold off to foreign buyers, and, finally, how great financial interests ward off Washington. For after he used leverage to conquer Wall Street, Kravis successfully applied the same principle to Washington – except this time, the return on his investment did not yield controlling interest in a corporation, but privileged access for his views, and immunity from close scrutiny of his acts. Kravis procured political inaction.

Even as Kravis tries to keep America safe for deals, though, deep fissures have appeared in his empire, raising the specter of a huge bill coming due in the nineties. Months of disarray in the “junk” bond market, underscored by February’s collapse of Drexel, Burnham, Lambert Group, Inc., the premier marketer of high-yield debt, have knocked out one big assumption upon which his empire of leverage was engineered. The market for new deals is nearly dormant. Still, because of old deals, U.S. industry as a whole is diverting more cash to debt relief than at any time since World War II. This means over-leveraged companies, at a minimum, will make corresponding cuts in the investments that yield profits, products, and jobs over the long term. And if the economy slides into a recession, all bets are off. A new, corporate debt crisis could take its place alongside the Third World and savings-and-loan debacles, bringing incalculable losses for the banks, insurance companies, and pension funds that invested in Henry Kravis’s buyouts.

Henry Kravis’s Wall Street lacks any sense of obligation to society, and its motto is “get as much as you can.” There are only two kinds of people: players and schmucks. Telling the difference is easy. Players, like Kravis himself, are not bound by the rules. Schmucks are.

Kravis first learned this critical distinction from his father, Raymond, a successful petroleum geologist in Tulsa, Oklahoma. The elder Kravis was a shrewd speculator and sometime partner of Kennedy-clan patriarch Joseph Kennedy. He sent young Henry to prep school and college, then off to New York in 1967 to begin Columbia University’s MBA program. Attending one of the most radical campuses during the height of the anti-war movement scarcely affected the single-minded Kravis. “I left it to my liberal friends to do things like getting arrested,” Kravis would later recall. “I had my mind on business.”

Since he was Jewish, Kravis lacked the proper pedigree for a job after graduation with one of the blue-chip, WASP investment-banking firms. Instead, through his father’s connections, he latched on at the less prestigious Bear, Stearns & Co. It was there that Kravis and his first cousin and colleague George Roberts met taciturn corporate financier Jerome Kohlberg, Jr.; together, these men would eventually turn wood-paneled Wall Street upside down.

The three shared a passion for a then-obscure corporate finance technique known as a leverage buyout. In a typical corporate LBO, a small group of investors buys up all the stock of a publicly traded corporation. They put about 10 percent down, and the rest of the purchase price is raised through high-interest loans from banks, insurance companies, and pension funds. As with a home mortgage, the interest on this debt is wholly deductible. So a leveraged company will often pay virtually no corporate income taxes immediately after a buyout, a margin that is critical to servicing its debt. In fact, some buyouts in the past have received tax refunds, courtesy of the U.S. treasury.

One essential element, however, makes LBOs risky business. After a corporation is leveraged, there is no independent source of income – like, say, a new homeowner’s wage earnings – to pay off the mortgage; instead, the earnings of the “new” corporate entity itself are used to make the payments. This puts a heavily leveraged company on a razor’s edge until its debt is paid down. Competition in the marketplace, a slowdown in the economy, or anything else that disturbs earnings, can push the entire corporation into bankruptcy, or force it to sell off valuable assets to meet debt payments. But if a leveraged corporation survives the three to five years it take to pay down its high-interest (or “junk”) debt, investors who put only 10 percent down own the entire corporation and can put it back on the stock market, at as much as twenty or thirty times their original investment.

In 1976, Kohlberg, Kravis, and Roberts ventured forth on their own to show the world what an LBO could do. With missionary zeal, a Garbo-like penchant for secrecy, just $120,000 in capital, and the barest-of-bare-bones offices, the new “boutique” firm of Kohlberg, Kravis, Roberts & Co. opened inauspiciously. Kohlberg’s good name, and almost legendary caution and reserve, gave ballast and credibility to the new firm. For his part, Kravis, short, intense, and volatile, was the consummate and well-tailored salesman; he had a knack for striding into a meeting with staid money managers and striking the perfect note of urbanity, briskness, and confidence. Consequently, he often got the “doggiest” sales job, that is, making the rounds of the pension funds, banks, and insurance companies, trying to persuade them to invest funds in KKR. It was a hard sell, for most of corporate America still considered LBOs to be immoral, and investors knew it.

In 1979, though, KKR engineered a deal that “broke the sound barrier,” as one investment banker later put it. The partners, using an intricate network that included two newly-created holding companies and a staggering array of banks, insurance companies, and state pension funds, captured control of Houdaille Industries, a conglomerate worth almost $400 million, while contributing just over $1 million of their own funds. “The public documents on that deal were grabbed up by every firm on Wall Street,” said one investment banker. “[KKR] showed everybody what could really be done. We all said, ‘Holy mackerel, look at this!’”

Ask the nation’s most celebrated newspaper editor the burning journalistic question of the day – whether or not to publish the Unabomber’s manifesto – and the response from Ben Bradlee is uncharacteristic avoidance:
“The wisdom of the ages cries out for silence from Bradlee,” he says.

Now, Benjamin Crowninshield Bradlee is not your shy, retiring type, so the question must be an awkward one for him. It’s not because when he faced a similar situation, he decided differently. Rather, it’s because he has just written a memoir suggesting that newspapers should not turn over their pages to political extortionists.

The episode Bradlee recounts in A Good Life: Newspapering and Other Adventures (Simon & Schuster, 1995) occurred in 1976. Croatian terrorists had hijacked a TWA 727 en route from Chicago to New York, and were threatening to kill all passengers unless five newspapers printed a screed demanding Croatian independence from Yugoslavia. One of those papers was The Washington Post, which Bradlee had been more or less running since 1965.

“The idea of anyone . . . telling me that I had to run something in the paper that I didn’t want to run, much less that I had to run it on page one, was inconceivable to me.” Bradlee writes. “Yet I followed their instructions meek as a lamb. Once. I’m not sure I’d do it twice.”

Whatever private doubts Bradlee, who stepped down in 1991, nurses about the Unabomber cave-in, you will never find him publicly second-guessing his old publisher, Donald Graham, or his successor as executive editor, Leonard Downie. In the Bradlee firmament of values, where courage, grace and honesty are prized, no quality is held in higher esteem than loyalty.

And it was the Post, after all, that gave Bradlee the opportunity to preside over a powerful newspaper in the nation’s capital, a city where information is almost as prized as currency. The Post was also the vehicle that enabled Bradlee, during the 1972 Watergate scandal, to reach a pinnacle of professional recognition (and mass celebrity) that most editors can only dream about. Finally, it was the Post and Graham who stood behind Bradlee during his hour of mortification in 1981, when a Pulitzer Prize-winning front-page story turned out to be an utter hoax.

To the degree that Bradlee has enjoyed “an especially privileged seat at the parade,” as he puts it, he owes nearly everything to The Washington Post and its owner for the past 60 years, the Graham family. But they owe him, too. It’s largely due to Bradlee’s stewardship that the Post is considered one of the nation’s best newspapers.

05 December 1999

In 1898, Adolphus Green, chairman of the National Biscuit
Company, found himself faced with the task of choosing a trademark for
his newly formed baking concern. Green was a progressive businessman.
He refused to employ child labor, even though it was then a common
practice, and he offered his bakery employees the option to buy stock
at a discount. Green therefore thought that his trademark should
symbolize Nabisco’s fundamental business values, “not merely to make
dividends for the stockholders of his company, but to enhance the
general prosperity and the moral sentiment of the United States.”
Eventually he decided that a cross with two bars and an oval – a
medieval symbol representing the triumph of the moral and spiritual
over the base and material – should grace the package of every Nabisco
product.

If they had wracked their brains for months, Bryan
Burrough and John Helyar could not have come up with a more ironic
metaphor for their book. The fall of Nabisco, and its corporate partner
R.J. Reynolds, is nothing less than the exact opposite of Green’s
business credo, a compelling tale of corporate and Wall Street greed
featuring RJR Nabisco officers who first steal shareholders blind and
then justify their epic displays of avarice by claiming to maximize
shareholder value.

The event which made the RJR Nabisco story worth telling
was the 1988 leveraged buyout (LBO) of the mammoth tobacco and food
conglomerate, then the 19th-largest industrial corporation in America.
Battles for corporate control were common during the loosely regulated
1980s, and the LBO was just one method for capturing the equity of a
corporation. (In a typical LBO, a small group of top management and
investment bankers put 10 percent down and finance the rest of their
purchase through high-interest loans or bonds. If the leveraged,
privately-owned corporation survives, the investors, which they can
re-sell public shares, reach the so-called “pot of gold”; but if the
corporation cannot service its debt, everything is at risk, because the
collateral is the corporation itself.

Lyndon Johnson:“What’s the net of the whole thing . . . that Oswald did it, and he did it for any reason?”

Richard Russell: “Well, just that he was a general misanthropic fella [who] had never been satisfied where he was on earth, in Russia or here, and that he had a desire to get his name in history, and all.”

From his first evening as president in November 1963, until his departure from the Oval Office in January 1969, Lyndon B. Johnson secretly recorded many of his telephone conversations.

When these tape recordings began to be released in 1993 in response to the 1992 John F. Kennedy Records Collection Act, I was eager to study them for new insights about the assassination of President Kennedy on November 22, 1963, and its aftermath. Conspiracy buffs had put forward one theory after another, distorting virtually every primary source of information about the Kennedy assassination, often beyond recognition.

I thought that the LBJ tapes bearing on the assassination would escape this fate because they would be widely accessible and easily understandable. In retrospect, that was extremely naïve.

Listening Closely

One of the clearest examples of how the recorded information has been misrepresented can be found in Michael Beschloss’s 1997 book, Taking Charge: The Johnson White House Tapes, 1963-1964. Beschloss presented a very important conversation between President Johnson and Senator Richard Russell (D-Georgia) from the evening of Friday, September 18, 1964. Earlier that day the Warren Commission, on which Russell sat, had met for the last time to settle outstanding differences over the final draft of its written statement, known as the Warren Report.

One of Russell’s key reservations was that he did not want to rule out a conspiracy. He insisted that since the Warren Commission had not had unhindered access to the records of the Communist governments of the Soviet Union and Cuba, the Report could not state unreservedly that Lee Harvey Oswald, the Kennedy killer, had acted alone.

The commission’s other members agreed with Russell’s reservation to an extent, and ultimately the language in the final draft was modified to assuage him. As Russell spoke to explain this process to Johnson the evening of September 19, 1964, he said, “I tried my best to get in a dissent, but they’d come ‘round [and] trade me out of it by givin’ me a little old thread of it.”

Beschloss’s reading of the Russell-Johnson conversation, however, was markedly different. According toBeschloss’s transcription, Russell told the president that “I tried my best to get in a dissent, but they’d come ‘round and trade me out of it by giving me a little old threat.”

Days after the 1992 election, columnist Michael Schrage opined that the biggest policy-winner in Washington was a small think-tank called the Council on Competitiveness. Sure enough, when Bill Clinton subsequently unveiled his master economic program, it read like a page out of the council hymnal, emphasizing both deficit reduction and investment in infrastructure and people. And in the two years since, it is not too much of an exaggeration to assert that, aside from proposed health, crime, and welfare reforms, every significant domestic initiative announced by the White House, and a fair number of foreign ones, could be successfully dusted for the council’s fingerprints.

These initiatives include the “clean car” research program to triple vehicles’ fuel economy over the next decade; R&D support for the manufacture of flat-panel screens; overhaul of the Labor Department’s worker-retraining programs; liberalization of export controls on advanced manufactures; especially computers and telecommunications equipment; revamping the flow of scientific and technological advice to the highest levels of government; the effort to pry open Japan’s markets; a National Information Infrastructure; and least surprisingly, increased funds for technology R&D and diffusion. At a time of general belt-tightening, overall R&D spending in the 1995 budget is scheduled to increase 3 percent, with select programs like the Technology Reinvestment Project and the Advanced Technology Program enjoying multi-fold budget increases.

The Clinton administration is hardly the first to plagiarize a private think tank’s agenda. The Heritage Foundation, for example, developed the blueprints for many of Ronald Reagan’s policies. What is different in this instance is the scope of the change, and how it came about. Clinton’s policies amount to nothing less than the most dramatic alteration in the business-government fabric since the Manhattan Project, which defined a pattern of industrial relations that persisted throughout the Cold War. No less interesting is the fact that one corporate CEO, less well-known than either Lee Iacocca or Ross Perot, has provided much of the vision and leadership for this reorganization of the government’s role in the post-Cold War economy. That chief executive is John Young, and his journey began inauspiciously, during a doubles tennis match in the spring of 1983.

Young was attending one of his first meetings of the Business Council, a group of about 100 leading chief executives from around the country. These thrice-yearly gatherings enable CEOs to communicate with high government officials formally and informally. This session featured Edwin Harper, then-President Reagan’s domestic-policy adviser, who discussed the government’s role in technological research and development. That was a subject of natural interest to Young, CEO of Hewlett-Packard Company, the original high-technology, Silicon Valley start-up. Capitalized for $538 in 1938 to build audio oscillators (the first customer was Walt Disney), by 1983 Hewlett-Packard employed 68,000 people, was the world’s largest producer of electronic instruments, and was, under Young’s stewardship, well on its way to becoming a major computer manufacturer.

Hewlett-Packard was more than holding its own in the marketplace, but Young was greatly disturbed over trends such as the disappearance of America’s consumer-electronics industry. On his own he had begun ruminating about the environment in which manufacturers compete. “I got interested in this subject simply as a CEO, thinking, ‘Why are we losing to the Japanese?’” So Young was particularly curious about what Harper had to say. “I was looking forward to hearing about [the government’s policy] because it surprised me that there was such a thing,” Young recalls.

After the speech, Young met informally with Harper during a tennis match. The verbal volleying that occurred on the subject of commercial R&D overshadowed their game. “I was kind of kidding Harper after his talk to say, ‘Gee, you don’t have a strategy after all,’” says Young. “And so we got to bantering about what it would take.”

At the time the Reagan administration had a political problem. The economy was just beginning to emerge from the 1981-1982 recession, the most severe economic downturn in 50 years. Worse, many manufacturers had suffered significant losses of market share to overseas competitors. The Democrats intended to call for an industrial policy to stanch the hemorrhaging in American manufactures.

Reagan intended to attack industrial policy as central planning in disguise, but he still needed something positive to assuage voters during an election year. So the White House decided to do what every administration does when presented with a difficult situation, especially one it prefers to ignore: They set up an advisory commission to study the problem and deliver a report before November.

Because of their tennis match, John Young was among the first people Edwin Harper called in May of 1983 to lead the President’s Commission on Industrial Competitiveness (PCIC). Young’s selection seemed to be shrewd and safe politics. He was a staunch opponent of the Democrats’ early version of industrial policy as espoused by Robert Reich and others. Young believed their approach, which included plans for a federally-supported industrial bank, to be overly statist.

The White House announced Young’s appointment in June with a flourish. If the administration was pleased with itself for having found a predictable chairman, however, in retrospect it made an enormous miscalculation. The 51-year-old Young had no intention of delivering a precooked conclusion. An electrical engineer by training, he intended to approach the panel with the same quiet but steady engineer’s outlook that had propelled him to the top of Hewlett-Packard in 25 years.

03 December 1999

In August 1964, presidential adviser McGeorge Bundy wrote Lyndon Johnson a spare but revealing memorandum. The Republicans had just nominated Barry Goldwater in San Francisco, rejecting if not humiliating the Rockefeller-led, internationalist wing of the party. Bundy sensed a golden opportunity for LBJ to court the “very first team of businessmen, bankers, et al.” orphaned politically by Goldwater. And the key to these people, claimed Bundy, was a Wall Street lawyer, banker, and diplomat named John J. McCloy:

He is for us, but he is under very heavy pressure from Eisenhower and others to keep quiet. I have told him that this is no posture for a man trained by Stimson . . . . [McCloy] belongs to the class of people who take their orders from presidents and nobody else.

My suggestion is that you should . . . ask him down for a frankly political discussion next week . . . . I think with McCloy on your side, a remarkable bunch of people can be gathered; this is something he does extremely well.

Nine years later, in the middle of the Watergate scandal, McCloy again came to mind when another leading Democrat sought to communicate with the “very first team.” As W. Averell Harriman recounted in a 1973 memo for his files,

I called Jack McCloy . . . to tell him that I thought the New York Republican establishment should review the seriousness of the White House situation and take some action. They had a responsibility to get the president to clean up and put in some honorable people that would help to reestablish the credibility and confidence in the White House . . . .

He asked me who I had in mind as the New York establishment and I said that I was too much removed from the scene to give him names. If Tom Dewey were alive he would be the one to talk to and the responsible heads of the banks that were greatly concerned by the economic instability and the international lack of confidence in the dollar. I said unfortunately Nelson Rockefeller is too competitive with Nixon to take any leadership. He suggested Herbert Brownell, whom I endorsed.

As journalist Richard Rovere observed in a famous 1961 essay, members of the American Establishment routinely deny that it exists, preferring to maintain that they are merely good citizens exercising their individual rights and responsibilities.[1] This unofficial policy of self-denial makes these candid memos all the more impressive. The authors are impeccable sources; Bundy even indiscreetly entitled his memo “Backing from the Establishment.”

The notion of an American Establishment, or, or more generally, of a governing elite in America, is accepted by some scholars, primarily sociologists and anthropologists who have studied inequality and stratification in various societies. But the concept has not won full acceptance in other disciplines or by the American public. Inequality is as dear to the status-conscious American heart as liberty itself, William Dean Howells once noted, but America self-consciously celebrates egalitarian man. “Elite” is practically a fighting word. No one seriously asserts that power and authority are evenly distributed in America, but the notion of anything akin to a privileged, self-perpetuating Establishment – an elite that governs, and therefore classes that are governed – sounds profoundly out of key, so counter to American myth that it would seem worth of an investigation by the House Un-American Activities Committee were it still in existence.

On those occasions when it is noticed, the American Establishment is usually accorded inordinate power and foresight, most often by polemicists at the extreme ends of the political spectrum, where conspiracy theories abound. Considering the Establishment’s significance, though, there is a dearth of serious research and writing about its composition, culture, and contributions. One British historian, borrowing from Sherlock Holmes, has likened the situation to the dog that did not bark in the night: The American Establishment is made all the more conspicuous by the absence of literature about it.

After a belated discovery in the mid-1950s, and some hot pursuit and scathing treatment in the 1960s and ‘70s, the Establishment and the role of elites are once again being more or less ignored. Following the American debacle in Vietnam, it was widely suggested that the Establishment, then badly fractured, should never again be entrusted with the conduct of U.S. foreign policy, where since World War II it has been most visible and active. In a famous declaration before Jimmy Carter’s inauguration, the Georgian’s close adviser, Hamilton Jordan, announced, “If you find a Cy Vance as secretary of state, and Zbigniew Brzezinski as head of national security, then I would say we failed . . . . The government is going to be run by people you never heard of.”

After Carter’s feat in 1980 by yet another self-proclaimed outsider, Brzezinski himself declared the Establishment all but dead, and successive pundits have tended to agree. But these reports, as Mark Twain might put it, have been exaggerated. After all, today’s executive branch features blue-bloods George Bush (Phillips Academy, Yale), James Baker (Princeton, corporate law), and Nicholas Brady (Wall Street’s Dillon, Read). If the position of these men does not prove the staying power of the Establishment’s Republican strain, it at least illustrates the continuing influence of individual White Anglo-Saxon Protestant (WASP) elites in America.

A society without a class structure, and therefore a governing elite, has never been constructed and may be a hopelessly utopian ideal, to judge from recent communist regimes. The more interesting question is, who comprises society’s governing elite and what does it do? For if stratification is inescapable, it follows that a society will largely reflect the goals and beliefs of elites from its most powerful class.

When exploring a complex subject, the philosopher Descartes once advised, divide it into as many parts as possible; when each part is more easily conceived, the whole becomes more intelligible. To follow this principle with respect to the American Establishment leads inexorably to one of its more significant parts, the same lawyer, banker, and diplomat whom Bundy advised Lyndon Johnson to cultivate in August 1964, and whom Averell Harriman called in 1973 during the Watergate crisis. John McCloy’s life is a classic guide to the American Establishment of the 20th century. His origins in Philadelphia, his ethnic background, and even his lifespan all coincide with, and thereby illuminate, the trajectory of the 20th century Establishment.

The creation of a national Establishment, or what sociologist E. Digby Baltzell called a “primary group of prestige and power,” was a social consequence of industrialization, of business and then political activities that were by the 1880s fast growing beyond traditional city boundaries. As a preindustrial ethos based on family ties and on landed and inherited wealth melted away, new social formations arose to bind together the industrial-era upper class on a national scale and to provide a semblance of tradition while absorbing and regulating new money. In the eastern financial centers of New York, Philadelphia, Boston, and Cleveland rose the citadels – the banks, corporations, law firms, and investment houses – that set the rules. The boarding schools, Ivy League colleges, fraternities, and metropolitan men’s clubs became the training grounds of upper-class society. And each of these institutions figured prominently in the life of John McCloy.

01 December 1999

In April 1976 the Senate Select Committee on Intelligence, headed by Senator Frank Church, made its valedictory report on domestic spying and other intelligence agency abuses. The 2,000-page Church committee report identified victims of wiretapping abuses by name, including Martin Luther King, Jr., several newsmen, and aides to Henry Kissinger.

The report also included a cryptic reference to the wiretapping of an unnamed “former Roosevelt White House aide” between June 1945 and May 1948. The Washington Post speculated that the person involved was Thomas (Tommy the Cork) Corcoran, an influential Washington lawyer and power broker. But the story went largely untold because the documentation linking it to Corcoran was lacking and because other revelations, especially the wiretap on King, dominated the media post-mortems. Now, however, a considerable body of evidence, including Corcoran’s own substantial Federal Bureau of Investigation file, crucial internal Bureau memorandums and the wiretap transcripts themselves, has been made public, much of it under the Freedom of Information Act. The story of the most extensive partisan political wiretap instigated by any postwar president can at last be fully revealed.

The evidence shows that just under six weeks after assuming the presidency, Harry Truman had Edward McKim, his top aide and close friend, ask the FBI to place a wiretap on Corcoran. Although the order for a tap on the flamboyant lawyer came from the White House, the idea that Truman might eavesdrop on his political enemies was planted by J. Edgar Hoover, who was resentful of Corcoran’s supposed efforts to depose him and eager to ingratiate himself with the untried president. The FBI promptly installed the tap but, contrary to Justice Department rules on warrantless wiretaps, never obtained oral or written approval for it from Attorney General Tom Clark.[1] For more than two years, Truman received summaries and transcripts from the round-the-clock tap through his military aide and poker companion General Harry Vaughan. Truman retained the wiretap reports and transcripts in his personal files until his death, in 1972. Then they were deposited in his presidential library in Independence, Missouri. The transcripts remained closed until Corcoran died, in December 1981, and were only recently opened to researchers.

The conversations of Tommy Corcoran cover a diverse range of foreign and domestic issues, which is not surprising, since he regularly chatted with such movers and shakers as Nelson Rockefeller, Drew Pearson, Harold Ickes, Lister Hill, Henry Morgenthau, Tom Clark, Francis Biddle, Alfred McCormack, Donald Hiss (Alger’s brother), Abe Fortas and James Forrestal. The transcripts will be required and highly colorful reading for historians writing about the purging of the New Dealers from the Truman administration, the use of the atomic bomb, early McCarthyism, the China lobby, Democratic politics, and the machinations of Washington power brokers.

In the transcripts, Corcoran says Truman is “dumb” because he thinks he can “surround himself almost entirely with mediocre Missourians and run the greatest country in the world.” He describes his own “troubles” with what he calls “the pro-Russians in the [FDR] White House.” He calls liberals, including Henry Wallace, Claude Pepper, and Hugo Black, “a bunch of guys that had the world in their hands last year” and are now “a helpless bunch of sheep.” He tells columnist Drew Pearson in August 1945 that he thinks the only reason the United States hasn’t dropped more atom bombs on “the Japs” is that “we and the British are sort of in an anti-Russian way and want to try to keep the Japs together as a nation,” whereas “the Russians and the Chinks want to bust that nation up.” Commiserating with the newly fired Nelson Rockefeller, he blames Rocky’s fate on “that wild Commie-kike crowd that are sure that if you’re not willing to dissolve all existing forms of society to their benefit, you’re an s-o-b.”